What to do on a no-print Friday in the IG dollar DCM? Well, how about speaking with the top 24 syndicate desks who underwrite over 80% of all debt issued in our market for starters? I did just that as is done here in the “QC” each and every Friday. Next week looks like a very robust one with sizeable upside potential. One syndicate guru noted we could see $40b next week and $150b for the month. What your corner seer can tell you is that I wrote the following here in the “QC” on Friday April 28th, 2017:

“It’s a weary world folks! However, the good news is that U.S. Corporations are an anomaly. They’re doing just fine and foreign investment into the safe haven of” yieldier” investment grade rated products is immense and growing. I expect a very robust May of $150-ish of all-in (IG Corporate plus SSA issuance). Credit is grinding tighter and ……investor appetite is voracious……especially coming off such a noticeably slow April that ended on a high note. So, issuers line up! Bankers man your stations and syndicate managers get ready because the best story in our world is Corporate America.”

The IG Corporate-only total for May is currently $72.638b and the all-in Corporate plus SSA total is $80.083b. We have two solid weeks to go in May and if we repeat what we’ve done thus far – along with next week’s upside potential – I do think we hit $150b. Now wouldn’t that be something…..AGAIN! But why listen to little ‘ole me when all those prestigious professionals manning their respective syndicate desks at the world’s biggest investment banks are patiently waiting for you to run through my recaps and move on to their numbers and thoughts for next week’s IG corporate issuance? They’re all there. Hurry up and get to it because it’s Friday and people have places to go and people to see.

Below please find my synopsis of everything Syndicate and Secondary from today’s debt capital markets, including the investment grade corporate bond data drill down as seen from my seat here in Syndicate, Sales and DCM.

Investment grade corporate bond trading posted a final Trace count of $17.9b on Thursday versus $19.8b on Wednesday and $17b the previous Thursday.

The 10-DMA stands at $16.9b.

Syndicate IG Corporate-only Volume Estimates This Week and May

IG Corporate New Issuance

This Week
5/08-5/12

vs. Current
WTD – $33.67b

May 2017
Forecasts

vs. Current
MTD – $72.638b

Low-End Avg.

$30.54b

110.25%

$122.27b

59.41%

Midpoint Avg.

$31.37b

107.33%

$123.42b

58.85%

High-End Avg.

$32.21b

104.53%

$124.56b

58.32%

The Low

$25b

134.68%

$100b

72.63%

The High

$41b

82.12%

$150b

48.43%

The Best and the Brightest” Syndicate Forecasts and Sound Bites for Next Week

I am happy to announce that the “QC” once again received 100% unanimous participation from all 24 syndicate desks surveyed for today’s “Best & Brightest” edition! 19 of those participants are among 2017’s YTD top 20 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table. 22 are in the top 25 of that same table. The 2017 League table can be found on your terminals at “LEAG” + [GO] after which you select (US Investment Grade Corporates). The participating desks represent 81.91% of all IG dollar-denominated new issue underwriting as of today’s table share percentage which simply means they’re the ones with visibility. But it’s not only about their volume forecasts, it’s also about their comments! This core syndicate group does it best; they know best; so they’re the ones you WANT and NEED to hear from. It’s a great look at the week ahead.

*Please note that these are Investment Grade Corporates only. They do not include SSA issuance unless otherwise noted.

As always “thank you” to all the syndicate desks that participated in today’s survey. I greatly appreciate your time to contribute and for making this edition of the “QC” among the most widely read! You are helping to promote Mischler’s value-added DCM proposition while adding readership to the “QC” that won Wall Street Letter’s Award as Best Broker Dealer Research in our financial services industry for three consecutive years! That’s 2014, 2015 and 2016…

My weekly technical data re-cap and question posed to the “Best and the Brightest” early this morning was framed as follows:

Here are this week’s IG new issue volume talking points:

The IG Corporate WTD total is now over 10% above this week’s syndicate midpoint average forecast or $33.67b vs. $31.37b.

MTD we’ve priced more than 58% of the syndicate projection for May or $72.63b vs. $123.42b.

The all-in MTD total (IG Corporates plus SSA) currently stands at $80.038b.

Spreads across the four IG asset classes tightened 3.00 bps to 12.25 vs. 15.25 bps as measured against their post-Crisis lows.

The 19 major industry sectors also tightened by 2.53 bps to 16.79 bps vs. 19.32 bps against their post-Crisis lows.

For the week ended May 10th, Lipper U.S. Fund Flows reported an inflow of $2.701b into Corporate Investment Grade Funds (2017 YTD net inflow of $51.877b) and a net outflow of $1.725m from High Yield Funds (2017 YTD net outflow of $6.091b).

Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the 46 deals that printed, 34 tightened versus NIP for a 74.00% improvement rate while 8 widened (17.50%) and 4 were flat (8.50%).

Entering today’s Friday’s session here’s how much we issued this week:

IG Corps: $33.67b

All-in IG (Corps + SSA): $39.42b

We’re in the midst of a Trump Slump. Former-FBI Chief Comey was fired by Trump despite the ongoing “From Russia With Love” investigation. Russian Foreign Minister Lavrov is then invited into the Oval Office the next day while U.S. press is barred from the room. (Who will be sweeping the office for bugs and other devices?) You can’t make this stuff up folks. There is a 100% chance of a June rate hike. North Korea continues to threaten its sixth nuclear test. The French election is now behind us, but the new young President of Gaul has his hands full while Le Pen rebuilds, renames and rebrands her National Front Party with an eye on 2022. The best story going, however, continues to be very strong U.S. corporate earnings as IG credit spreads grind tighter and tighter offering issuers great opportunities to print NOW!

This Week’s IG New Issues and Where They’re Trading – Great Market Tone!

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending March 29th

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Month end? Quarter end? Lots of Global economic data? You know what that means. It was a signed, sealed and delivered no-print Friday today. That’s always welcome as it gave me a head start on today’s more involved syndicate survey. Forecasts today are for next week’s primary market supply as well as for the month of April. I also have a snapshot of a decade’s worth of April IG supply across three categories: all-in (Corps + SSA), Corporate as well as just SSA volumes. I call the section “Knowing the Past for the Future.” It will help put the Best and Brightest’s thoughts and numbers into a historical perspective for you. You should take a look at that table.

To quickly re-cap their thoughts, all 24 syndicate desks responded to my “QC” survey The midpoint average for next week’s IG Corporate only supply is $21.40b characterized by tight voting groups with 18 of the 24 participants projecting within $20 to $25b with a low of $12b and a high of $31b. As for April, the average was $91.50b. Voting brackets were all over the place ranging from a low of $65b to a high of $111b. But don’t just take my word for it. All 24 syndicate operatives contributed responses with their numbers so, scroll down below and read their meaningful thoughts.

I hope you enjoy your read and that it helps you prepare for the week and month ahead. Thanks again to the stellar 24 participating syndicate desks who are always there for me and for YOU each and every Friday edition of the “QC”.

IG Primary & Secondary Market Talking Points

BAML’s IG Master Index was unchanged at +122. +106 represents the post-Crisis low dating back to July 2007.

Investment grade corporate bond trading posted a final Trace count of $19.3b on Thursday versus $20.7b on Wednesday and $17.8b the previous Thursday.

The 10-DMA stands at $17.3b.

Syndicate IG Corporate-only Volume Estimates for This Week and March

IG Corporate New Issuance

This Week
3/27-3/31

vs. Current
WTD – $22.15b

March 2017
Forecasts

vs. Current
MTD – $129.998b

Low-End Avg.

$25.25b

87.72%

$113.79b

114.24%

Midpoint Avg.

$26.50b

83.58%

$114.31b

113.72%

High-End Avg.

$27.75b

79.82%

$114.83b

113.21%

The Low

$15b

147.67%

$80b

162.50%

The High

$31b

71.45%

$140b

92.86

The Best and the Brightest” Syndicate Forecasts and Sound Bites for Next Week and April

I am happy to announce that the “QC” once again received 100% unanimous participation from all 24 syndicate desks surveyed for today’s “Best & Brightest” edition! 23 of those participants are among 2017’s YTD top 26 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table. The 2017 League table can be found on your terminals at “LEAG” + [GO] after which you select (US Investment Grade Corporates). The participating desks represent 83.65% of all IG dollar-denominated new issue underwriting as of today’s table share percentage which simply means they’re the ones with visibility.

*Please note that these are Investment Grade Corporates only. They do not include SSA issuance unless otherwise noted.

My weekly technical data re-cap and question posed to the “Best and the Brightest” early this morning was prefaced as follows:

First up, here’s are this week’s IG new issue volume talking points:

We fell 17% shy of this week’s syndicate midpoint average forecast or $22.15b vs. $26.50b.

MTD we’ve priced 13% more than the IG Corporate mid-range projection for all of March or $129.998b vs. $114.31b.

The all-in MTD total (IG Corporates plus SSA) now stands at $166.158b. March, 2017 has officially broken into 8th place as the highest volume month for all-in issuance (IG Corporates plus SSA).

The YTD IG Corporate only volume is now $393.085b. It is the highest IG Corporate-only quarterly volume total in history.

YTD we have officially priced $506.151b in all-in IG Corporate and SSA issuance also ranking it #1 as the highest quarterly volume total ever.

Here are this week’s five key primary market driver averages from the 38 IG Corporate-only deals that priced:

NICS: 0.46 bps

Oversubscription Rates: 3.48x

Tenors: 10.14 years

Tranche Sizes: $791mm

Spread Compression from IPTs to the Launch: <19.31> bps

Here’s how this week’s performance data compares against last week’s:

Average NICs tightened 1.29 bps this week to 0.46 bps vs. 1.75 bps.

Over subscription or bid-to-cover rates, the measure of demand, increased 0.58x to 3.48x vs. 2.90x..

Average tenors shortened by a meaningful 1.41 years to 10.14 years vs. 11.55 years.

Spreads across the four IG asset classes tightened by 0.75 bps to 16.00 bps vs. 16.75 as measured against their post-Crisis lows.

The 19 major industry sectors also tightened by 0.74 bps to 19.63 vs. 20.37 also against their post-Crisis lows.

For the week ended March 29th, Lipper U.S. Fund Flows reported an inflow of $3.966b into Corporate Investment Grade Funds (2017 YTD net inflow of $39.089b) and a net outflow of $248.465m from High Yield Funds (2017 YTD net outflow of $5.937b).

Taking a look at the secondary trading performance of this week’s 38 IG and 3 SSA new issues, of the 41 deals that printed, 32 tightened versus NIP for a 78.00% improvement rate while 4 widened (9.75%) and 5 were flat (12.25%).

The numbers are in. Entering today’s Friday’s session here’s how much we issued this week:

IG Corps: $22.15b

All-in IG (Corps + SSA): $25.90b

Is this week’s overwhelmingly hawkish Fed-speak justified? Or, is Fed leadership talking up yields? The GOP seemed to have recovered from the health care fiasco. Monday saw 10 issuers stand down, but the market quickly recouped lost ground with issuers printing the rest of the week. Today marks month-end but more importantly quarter end. The Easter break is approaching all before we re-enter black-outs.

And now the all-important “two-part” question (and answer(s) posed to the fixed income market’s top Syndicate desks, along with my synopsis of everything Syndicate and Secondary from today’s debt capital markets, including the investment grade corporate bond data drill down as seen from my seat here in Syndicate, Sales and DCM.

Have a great evening!
Ron Quigley, Managing Director and Head of Fixed Income Syndicate

7 IG Corporate issuers tapped the dollar DCM today pricing 12 tranches between them totaling $9.275b. The SSA space hosted 2 issuers across 4 tranches including a $5b 3-part from the Sultanate of Oman that pumped up the all-in IG day totals to 9 issuers, 16 tranches and $14.625b. March has certainly started off on the right foot.
The WTD total is now 52% more than this week’s syndicate midpoint average forecast or $38.825b vs. $25.44b.
The all-in (IG Corporate plus SSA WTD volume total is now $51.425b.

Deregulation, cutting corporate taxes, focusing on American manufacturing and jobs while negotiating with America’s interests first and building a strong national defense equates to GROWTH. Growth will cause rates to rise, rising rates will swell the stock market and bank stocks should get back to a semblance of their true values among many other things.IG Primary & Secondary Market Talking Points

Mercury General Corp. upped its 10-year Senior Notes new issue to $375mm from $350mm at the launch and at the tightest side of guidance.

Telus Corp. increased its 10-year Senior Notes new issue to $500mm from $350mm at the launch.

Brixmor Operating Partnership LP upsized today’s 10-year Senior Notes new issue to $400mm from $300mm at the launch and at the tightest side of guidance.

The average spread from IPTs thru the launch/final pricing of today’s 12 IG Corporate-only new issues was <19.00> bps.

We missed the midpoint syndicate forecast for IG Corporate volume this week by a lot. In fact, the very low estimate calling for only $19.4b was off by 42% with only $11.125b in new supply. Next week, however, desks seemed focused on around $25b.

Yellen speaks next Friday, March 3rd and the Employment Report is the following Friday, March 10th. Those are really the only two bits of data that could move the market. Of course that’s notwithstanding any one of myriad global event risk factors playing out i.e. the Dutch election on Wed. 3/15 followed by round one of the French election on Sunday, April 23rd and round 2 on Sunday, May 7th. As we get closer and closer to each, polling will gyrate thru the markets.

Next week has been a huge one in each of the past three years for IG Corporate volume and overall IG issuance including SSA product.

Take a look:

2016 – IG Corps: $50.72b Corps + SSA: $61.22b

2015 – IG Corps: $59.03b Corps + SSA: $65.03b

2014 – IG Corps: $50.29b Corps + SSA: $55.18b

Unfortunately no estimate for next week comes close to the $50m mark. The highest estimate is an out layer at $43b. The most dense groupings are focused on around $25b with the midpoint estimate being $25.46b. I am more optimistic for 30b+ in new IG Corporate issuance only because we’ve disappointed on recent weekly issuance projections in 3 of the past 4 weeks, the time is right, tone is formidable, concessions are skimpy, issuers cannot sit around forever, demand is very strong and so, I err to the upside. Overall issuance including SSA could top $40b.

IG Primary & Secondary Market Talking Points

Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the 20 deals that printed, 17 tightened versus NIP for a 00% improvement rate while 2 widened (10.00%) and 1 were flat (5.00%).

For the week ended February 22nd, Lipper U.S. Fund Flows reported an inflow of $2.566b into Corporate Investment Grade Funds (2016 YTD net inflow of $20.906b) and a net inflow of $726.282m into High Yield Funds (2016 YTD net inflow of $1.616b).

BAML’s IG Master Index was unchanged at +123. +106 represents the post-Crisis low dating back to July 2007.

Investment grade corporate bond trading posted a final Trace count of $21.2b on Thursday versus $20.8b on Wednesday and $24b the previous Wednesday.

The 10-DMA stands at $19.9b.

Syndicate IG Corporate-only Volume Estimates for This Week and February

IG Corporate New Issuance

This Week
2/20-2/14

vs. Current
WTD – $11.125b

February 2017
Forecasts

vs. Current
MTD – $61.15b

Low-End Avg.

$18.25b

60.96%

$90.65b

67.46%

Midpoint Avg.

$19.40b

57.35%

$91.96b

66.50%

High-End Avg.

$20.54b

54.16%

$93.26b

65.57%

The Low

$15b

74.17%

$85b

71.94%

The High

$26b

42.79%

$120b

50.96%

The Best and the Brightest” Fixed Income Syndicate Forecasts and Sound Bites for Next Week

I am happy to announce that I had 96% response to today’s “Best & Brightest” survey! That means 23 out of 24 desks. 21 of those participants are among 2017’s YTD top 25 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table. In fact, 22 of today’s 23 participants finished in the top 25 of last year’s 2016 final IG Corporate Bloomberg league table. The 2017 League table can be found on your terminals at “LEAG” + [GO] after which you select (US Investment Grade Corporates). The participating desks represent 84.38% of all IG dollar-denominated new issue underwriting as of today’s table share percentage which simply means they’re the ones with visibility. But it’s not only about their volume forecasts, it’s also about their comments. This core syndicate group does it best; they know best; so they’re the ones you WANT and NEED to hear from. It’s a great look at the week ahead.

*Please note that these are Investment Grade Corporates only. They do not include SSA issuance unless otherwise noted.

My weekly technical data re-cap and question posed to the “Best and the Brightest” early this morning was framed as follows:

Getting right to it today, here are this week’s numbers entering today’s morning session:

We priced an anemic 57% of this week’s already low syndicate midpoint average forecast or $11.125b vs. $19.40b.

Thus far in February we priced 66.50% of the monthly syndicate projection or $61.15b vs. $91.96b.

All-in YTD IG Corporate and SSA issuance stands at $303.183b!

Wednesday was the fastest pace ever to reach the $300mm mark for all-in IG Corporate and SSA issuance.

The 19 major industry sectors tightened 0.79 bps to 20.37 vs. 21.16 bps also against their post-Crisis lows.

Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the 20 deals that printed, 17 tightened versus NIP for a 00% improvement rate while 2 widened (10.00%) and 1 were flat (5.00%).

For the week ended February 22nd, Lipper U.S. Fund Flows reported an inflow of $2.566b into Corporate Investment Grade Funds (2016 YTD net inflow of $20.906b) and a net inflow of $726.282m into High Yield Funds (2016 YTD net inflow of $1.616b).

It seems as if syndicate desks have said issuance would increase “the week after next” in each of the last two Friday’s. Now, however, with Corporate America having posted earnings and with most issuers having exited blackouts, expectations are for a much more robust calendar next week. The two bits of potentially market moving data are: Fed Chair Janet Yellen speaks at the Executive’s Club of Chicago on Friday, March 3rd and the Employment Situation for February is scheduled to be released on Friday, March 10, 2017, at 8:30 a.m. (EST).After that there’s the FOMC meeting on Tuesday and Wednesday March 14th and 15th, which is associated with a Summary of Economic Projections and a press conference by Chair Yellen. Blackouts then begin shortly thereafter. The point being – this time, next week really should see very strong issuance across all sectors. But why listen to me let’s go back to the same week in time over the past three years. The results are eye-opening:

2016 – IG Corps: $50.72b Corps + SSA: $61.22b

2015 – IG Corps: $59.03b Corps + SSA: $65.03b

2014 – IG Corps: $50.29b Corps + SSA: $55.18b

We all understand that “past performance is no guarantee of future results” but those are pretty telling statistics right there folks!

The Big Question: Next Wednesday begins the month of March, so today I ask a two-part question “what are your thoughts and numbers for BOTH next week AND March?The “Best and the Brightest” in Their Own Words

Syndicate IG Corporate-only Volume Estimates for This Week and February

The Best and the Brightest” – Syndicate Forecasts and Sound Bites for Next Week

This Week’s IG New Issues and Where They’re Trading

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending January 25th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

It was a very welcome no print Friday today. It gives me an opportunity on behalf of Team Mischler to thank Microsoft, AT&T and Apple for inviting us to serve this week on their multi-tranche transactions. Thanks also to the leads who worked with us at HSBC – on Microsoft; Citigroup – on AT&T and Goldman Sachs on Apple. All greatly appreciated!

But I know why you all checked in this evening – it’s to hear what the soothsayers of syndicate say about next week’s investment grade corporate new issue volume. They all once again participated in my survey and their numbers and thoughts await you below. Next week there is a lack of any earth shattering, market moving economic data and although Fed members will be speaking here and there it opens the door for further issuance. Considering the very strong market tone that we’re going out with today in which 75% of this week’s IG Corporate new issues are tighter to MUCH tighter, I’d have to once again take the upside of forecasts. But heck, we all know you want to hear from the top 23 under writers so, let’s first re-cap the day and then it’s on to the “Best and the Brightest” that syndicate has to offer.

IG Primary & Secondary Market Talking Points

Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the 36 deals that printed, 27 tightened versus NIP for a 75.00% improvement rate while 6 widened (16.75%) and 3 were flat (8.25%).

For the week ended January 25th, Lipper U.S. Fund Flows reported an inflow of $2.657b into Corporate Investment Grade Funds (2016 YTD net inflow of $12.354b) and a net inflow of $412.595m into High Yield Funds (2016 YTD net inflow of $291.062m).

BAML’s IG Master Index was unchanged at +128. +106 represents the post-Crisis low dating back to July 2007.

Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.21. The “LUACOAS” wide since 2012 is +215. +120 is the new tight.

WTD, we surpassed the syndicate midpoint average forecast with a 2.12x bid-to-cover rate or $44.575b vs. $21.63b. (206.08%!)

February MTD we priced over nearly 14%% of the syndicate forecasts in just two days $12.57b vs. $91.96b.

All-in YTD IG Corporate and SSA issuance stands at $242.358b which simply means we are on pace to price $2.644 Trillion in 2017! HOOOAH. That won’t happen but it’s nice to put things in their proper perspective.

Here are this week’s five IG Corporate-only key primary market driver averages after the close of yesterday’s:

NICS: <0.87> bps

Oversubscription Rates: 3.12x

Tenors: 11.60 years

Tranche Sizes: $1,311mm

Spread Compression from IPTs to the Launch: <19.77> bps

Here’s how this week’s performance data compares against last week’s:

NICs tightened 2.00 bps to <0.87> bps vs. 1.13 bps.

Over subscription or bid-to-cover rates contracted by 0.17x to 31.12x vs. 3.29x.

Average tenors extended dramatically by 4.93 years to 11.60 years vs. 6.67 years.

Tranche sizes increased by $466mm to $1,311mm vs. $845mm.

Spread compression from IPTs to the launch/final pricing of this week’s 28 IG Corporate-only new issues tightened by <1.57> bps to <19.77> vs. <18.20> bps.

Spreads across the four IG asset classes widened 2.00 bps to 21.00 vs. 19.00 bps as measured against their post-Crisis lows.

The 19 major industry sectors widened 1.20 bps to 25.20 vs. 24.00 bps also against their post-Crisis lows.

Corporate America has posted earnings. Lots of issuers have exited blackouts. Next week we have a very light calendar insofar as economic data releases are concerned. Japan’s Abe meets with President Trump but that’s not until a week from Saturday. There are several Fed members that will be speaking next week but we are in a steady-as-she-goes mode and I strongly suspect a big week next week.

And now after my work and thoughts I ask you my favorite question of the week gift to you I ask, “what are your numbers and thoughts for next week’s IG Corporate new issue volume.

Thank you very much! -Ron”

The “Best and the Brightest” in Their Own Words

……..……and here are their formidable responses:*

*Responses to the QC weekly canvass of the top 23 investment bank fixed income syndicate desks are available only via direct email to distribution list recipients of Quigley’s Corner.

Syndicate IG Corporate-only Volume Estimates for Next Week

IG Corporate New Issuance

Next Week
2/06-2/10

Low-End Avg.

$23.74b

Midpoint Avg.

$24.72b

High-End Avg.

$25.70b

The Low

$15b

The High

$35b

A Look at How the Voting Brackets Broke-Out for Next Week

Next Week
2/06-2/10

1: 15b

1: 15-20b

2: 20b

3: 20-25b

9: 25b

4: 25-30b

1: 30b

1: 31b

1: 30-35b

Below please find my synopsis of everything Syndicate and Secondary from today’s debt capital markets, including the investment grade corporate bond data drill down as seen from my seat here in Syndicate, Sales and DCM.

Here is this week’s day-by-day re-cap of the five key primary market driver averages for IG Corporates–only followed by this week’s and the prior five week’s averages:

KEY IG CORPORATE
NEW ISSUE DRIVERS

MON.
1/30

TUES.
1/31

WED.
2/01

TH.
2/02

FRI.
2/03

THIS WEEK’S
AVERAGES

AVERAGES
WEEK 1/23

AVERAGES
WEEK 1/16

AVERAGES
WEEK 1/09

AVERAGES
WEEK 1/02

AVERAGES
WEEK 12/26

New Issue Concessions

7 bps

5.36 bps

N/A

<2.82> bps

N/A

<0.87> bps

1.13b bps

3.42 bps

0.85 bps

2.25 bps

N/A

Oversubscription Rates

2.68x

2.89x

N/A

3.71x

N/A

3.12x

3.29x

2.40x

2.85x

2.45x

N/A

Tenors

14.11 yrs

12.37 yrs

N/A

9.15 yrs

N/A

11.60 yrs

6.67 yrs

12 yrs

7.83 yrs

6.52 yrs

N/A

Tranche Sizes

$1,983mm

$1,179mm

N/A

$967mm

N/A

$1,311 yrs

$845mm

$1,123mm

$927mm

$859mm

N/A

Avg. Spd. Compression
IPTs to Launch

<17.22> bps

<19.54> bps

N/A

<21.88> bps

N/A

<19.77> bps

<18.20> bps

<14.69> bps

<18.77> bps

<15.27> bps

N/A

This Week’s IG New Issues and Where They’re Trading

Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the 36 deals that printed, 27 tightened versus NIP for a 75.00% improvement rate while 6 widened (16.75%) and 3 were flat (8.25%).

Issues are listed from the most recent pricings at the top working back to Monday at the bottom. Thanks! –RQ

Issuer

Ratings

Coupon

Maturity

Size

IPTs

GUIDANCE

LAUNCH

PRICED

TRADING

Apple Inc.

Aa1/AA+

FRN

2/08/2019

500

3mL+equiv

3mL+equiv

3mL+8

3mL+8

3mL+7/5

Apple Inc.

Aa1/AA+

1.55%

2/08/2019

500

+60a

+40a (+/-2)

+38

+38

34.5/32

Apple Inc.

Aa1/AA+

FRN

2/07/2020

500

3mL+equiv

3mL+equiv

3mL+20

3mL+20

3mL+17/15

Apple Inc.

Aa1/AA+

1.90%

2/07/2020

1,000

+65a

+50a (+/-5)

+45

+45

43/41

Apple Inc.

Aa1/AA+

FRN

2/09/2022

1,000

3mL+equiv

3mL+equiv

3mL+50

3mL+50

3mL+45/43

Apple Inc.

Aa1/AA+

2.50%

2/09/2022

1,500

+80a

+60a (+/-2)

+58

+58

58/56

Apple Inc.

Aa1/AA+

3.00%

2/09/2024

1,750

+100a

+80a (+/-5)

+75

+75

71/69

Apple Inc.

Aa1/AA+

3.35%

2/09/2027

2,250

+110a

+90a (+/-2)

+88

+88

83/81

Apple Inc.

Aa1/AA+

4.25%

2/09/2047

1,000

+140a

+120a (+/-5)

+115

+115

111/109

Johnson Controls Int’l. PLC

Baa1/BBB+

4.50%

2/15/2047

500

+170a

+150a (+/-5)

+145

+145

139/138

PNC Financial Services

A3/NR

FRN

8/07/2018

575

N/A

N/A

N/A

3mL+25

3mL+24/23

Standard Industries Inc.

Ba2/BBB-

5.00%

11/15/2026

500

low 5.00%
5.125

N/A

N/A

+253

254/250

US Bancorp

A3/BBB+

5.30%

PerpNC10

1,000

5.625%a

5.35%a (+/-5)

5.30%

$100.00

283/278

Province of Ontario

Aa2/AA-

2.40%

2/08/2022

2,500

MS +44a

MS +42

MS +42

+49.35

46.5/44.5

AT&T Inc.

Baa1/A-

3.20%

3/01/2022

1,250

+150a

+135a (+/-5)

+130

+130

125/123

AT&T Inc.

Baa1/A-

3.80%

3/01/2024

750

+175a

+160a (+/-5)

+155

+155

150/147

AT&T Inc.

Baa1/A-

4.25%

3/01/2027

2,000

+195a

+185a (+/-5)

+180

+180

170/168

AT&T Inc.

Baa1/A-

5.25%

3/01/2037

3,000

+235a

+225a (+/-5)

+220

+220

207/204

AT&T Inc.

Baa1/A-

5.45%

3/01/2047

2,000

+250a

+245a (+/-5)

+240

+240

229/226

AT&T Inc.

Baa1/A-

5.70%

3/01/2057

1,000

+275a

+270a (+/-5)

+265

+265

257/252

Bank of NY Mellon Corp.

A1/AA-

2.60%

2/07/2022

1,250

+90a

+80a (+/-5)

+75

+75

74/72

Bank of NY Mellon Corp.

A1/AA-

11NC10

2/07/2028

1,000

+110-115/+112.5a

+105a (+/-5)

+100

+100

97/93

Commw’th. Bk. of Australia

Aa2/NA

FRN

8/03/2018

200

N/A

N/A

N/A

3mL+35

3mL+37/35

National Rural Utilities Coop.

A1/A+

2.95%

2/07/2024

450

+85-90/+87.5a

+75-80

+75

+75

73/71

Seagate HDD Cayman

Baa3/BBB-

4.25%

3/01/2022

750

+high 200s
+287.5a

+250a (+/-10)

+240

+240

248/243

Seagate HDD Cayman

Baa3/BBB-

4.75%

3/01/2024

500

+low 300s
+312.5a

+285 (+/-10)

+275

+275

280/275

Crown Castle Int’l. Corp.

Baa3/BBB-

4.00%

3/01/2027

500

+175-180

+160a (+/-3)

+157

+157

157/155

Microsoft Corp.

Aaa/AAA

1.85%

2/06/2020

1,500

+60a

+45a (+/-5)

+40

+40

35/33

Microsoft Corp.

Aaa/AAA

2.40%

2/06/2022

1,750

+70a

+55a (+/-5)

+50

+50

47/46

Microsoft Corp.

Aaa/AAA

2.875%

2/06/2024

2,250

+90a

+75a (+/-5)

+70

+70

59/57

Microsoft Corp.

Aaa/AAA

3.30%

2/06/2027

4,000

+100a

+90a (+/-5)

+85

+85

77/75

Microsoft Corp.

Aaa/AAA

4.10%

2/06/2037

2,500

+115a

+105a (+/-5)

+100

+100

88/87

Microsoft Corp.

Aaa/AAA

4.25%

2/06/2047

3,000

+130a

+120a (+/-5)

+115

+115

106/104

Microsoft Corp.

Aaa/AAA

4.50%

2/06/2057

2,000

+155a

+145a (+/-5)

+140

+140

129/126

USAA Capital Corp.

Aa1/AA

FRN

2/01/2019

350

3mL+high30s/
+37.5a

3mL+23-25

3mL+23

3mL+23

3mL+23

IFC(tap) New Total: $750mm

Aaa/AAA

FRN

12/15/2021

250

N/A

3mL+13a

3mL+13

3mL+13

3mL+15/14

Indexes and New Issue Volume

Please note that the below index levels are as of 4:30pm ET.
*Denotes new tight.

Index

Open

Current

Change

IG27

65.548

63.605

<1.943>

HV27

138.23

138.31

0.08

VIX

11.93

10.95

<0.98>

S&P

2,280

2,297

17

DOW

19,884

20,071

187

USD

IG Corporates

USD

Total (IG + SSA)

DAY:

$0.00 bn

DAY:

$0.00 bn

WTD:

$44.575 bn

WTD:

$47.325 bn

MTD:

$12.575 bn

MTD:

$15.075 bn

YTD:

$184.958 bn

YTD:

$242.358 bn

Lipper Report/Fund Flows – Week ending January 25th

For the week ended January 25th, Lipper U.S. Fund Flows reported an inflow of $2.657b into Corporate Investment Grade Funds (2016 YTD net inflow of $12.354b) and a net inflow of $412.595m into High Yield Funds (2016 YTD net inflow of $291.062m).

Over the same period, Lipper reported a net inflow of $991.469m into Loan Participation Funds (2016 YTD net inflow of $4.760b).

Cited by Wall Street Letter in each of 2014, 2015 and 2016 for “Best Research / Broker-Dealer”, the QC observations are one of three distinctive research content pieces produced by Mischler Financial Group. The QC is a daily synopsis of everything Syndicate and Secondary as seen from the perch of our fixed income trading and debt capital markets desk and includes a comprehensive “deep dive” with optics on the day’s investment grade corporate debt new issuance and secondary market data encompassing among other items, comparables, investment grade credit spreads, new issue activity, secondary market most active issues, and upcoming pipeline. Any political views expressed are those of the author only.

Investment Grade Corporate Debt New Issue Re-Cap :

Rates Are Going Up in December Folks! Dalio, Montag and…Quigley?!

Chronology of a Politician and a Great Veteran Story

Global Market Recap

IG Primary & Secondary Market Talking Points

Syndicate IG Corporate-only Volume Estimates for This Week and November

4 IG Corporate issuers priced 7 tranches between them totaling $4.95b with one $500mm assist from the SSA space thanks to EDC’s new 4-year, bringing the all-in IG day totals to 5 issuers, 8 tranches at $5.45b. We’ve now priced 53.82% of this week’s syndicate midpoint average forecast or $15.85b vs. $29.45b.

Inflation is Coming Back and Rates Are Going Up in December Folks! Dalio, Montag and..Quigley!?!?

You hear that sound? That’s the sound of banks revving up their engines. Not only did I write about the post-Election rally yesterday, but I also got specific about previous Washington dysfunction, over regulation and higher rates and inflation.” Today Tom Montag, COO of Bank of America Corp chimed in with similar promise of the new incoming President-elect Trump’s first term saying, there is a “sense of optimism” that “the government will work better together to supply the foundation of growth that we as a bank can optimize.” He continued, “We have a lot of regulations, so it’s probably healthy to take a breath.”

Bridgewater Chief Ray Dalio said today, “There is a good chance that we are at one of those major reversals that last a decade. We believe that we will have a profound President-led ideological shift that is of a magnitude, and in more ways than one, analogous to Ronald Reagan’s shift to the right. Of course, all analogies are also different, so I should be clearer. Donald Trump is moving forcefully to policies that put stimulation of traditional domestic manufacturing above all else, that are far more pro-business and that are far more protectionist.”

IG CDX tightened 1.5 bps, HV reeled in 4.8, the VIC compressed 1.11 while the DOW reached another all-time high closing up 55 to 18,923 with the S&P up 16 and Nasdaq up 57.

And now, continuing on where I left off yesterday in the “QC” – President-elect Donald Trump will unleash inflation and rates WILL go up! The populist/Republican platform is so expansionary he will single handedly create inflation. If you are or were a detractor, forget it. That was politics folks. Get ready to dive deep into reality. The Fed will raise money on net interest margins and create inflation. The Fed has no choice. How’s that from one of the first and most vocal prognosticators of “lower-for-longer” after all these years? It will hurt overseas as a result, but that was then and this is now! The U.S.A. cannot worry as much about impacts overseas when we have a US-focused agenda designed to improve operating efficiency. A hike in December will roil Europe, but it will not be done to hurt Europe. Rather, it’s going to happen to take care of our nation. The ramifications will be plenty and they will most assuredly crack the fragile Euro egg wide open. Fret not, however, as the risk reward for IG fixed income will remain healthy. Although investors are switching into equities, foreign and specifically European investors will find a substantially improved risk/reward upside to investing in U.S. IG credit markets. More yield, less risk than staying investing in the EU with so much discord. So strap yourselves in because long-term interest rates are about to go up and the inflationary spending spree is about to take place. Good bye to the low rates that have been hitting bank earnings and revenues. A healthier banking system is the foundation for a healthier economy.

How Congressman David Young Led the Way for Veteran Change

Well, here we are on November 15th, 2016 one week detached from our historic November 8th national elections and 2 years and 5 months away from David Young’s first Congressional district win (R-IA). He has wasted no time getting things done having arrived on the scene in Washington in a big way by working hard and producing results. To capture part of the sweeping positive changes about to take place in our country, there is more to report on David Young. My favorite Iowans spent the last week picking up all their big barn signs, etcetera around their 16 county district. Now, David Young, can go back to the Beltway and continue to fight for good change. One of his many passions is his No Veterans Crisis Line Call Should Go Unanswered Act (H.R. 5392) bill that passed in the House 357-0. Re-read that folks. That’s right…..357-0! Now, perhaps his bill can get thru the Senate and onto Obama’s desk. (It should be known and WILL be now known here in the “QC” that none other than Harry Reid stopped it prior to the election). Reid can’t retire soon enough!

Congressman Young’s legislation seeks to provide necessary responsiveness and performance improvements to the Veterans Crisis Line, which is the confidential, toll free hotline for veterans seeking suicide prevention and crisis resources help from U.S. Department of Veterans Affairs (VA) responders.

As Congressman Young said, “Our veterans, who have made such significant sacrifices on behalf of our nation and in defense of our freedoms, deserve quality mental health care resources which are accessible and responsive. There is absolutely no excuse for a veteran to contact the Veterans Crisis Line and not get the help they are seeking. Our veterans deserve better, which is why I have put forth this important bipartisan legislation to make critical fixes to the Veterans Crisis Line – fixes it clearly needs. I thank my colleagues for working with me to advance this bill and put our veterans first.”

Chronology of How Young’s Veteran Bill Happened in the House

September 21, 2016 – Congressman Young’s No Veterans Crisis Line Call Should Go Unanswered Act was approved in a markup by the full U.S. House Veterans Affairs Committee.

September 14, 2016 – Congressman Young urges his colleagues to support the No Veterans Crisis Line Call Should Go Unanswered Act on the floor of the U.S. House of Representatives.

September 1, 2016 – Congressman Young sends a letter to VA Secretary McDonald highlighting continued problems with the Veterans Crisis Line.

June 28, 2016 – Congressman Young reacts to a Government Accountability Office (GAO) report finding approximately 30 percent of text messages sent as tests to the Veterans Crisis Line went unanswered.

June 23, 2016 – Congressman Young testifies before the U.S. House Veterans Affairs Committee on the importance of the legislation.

June 7, 2016 – Congressman Young introduces the No Veterans Crisis Line Call Should Go Unanswered Act in response to concerns voiced by Iowa veterans about unanswered calls, emails or other communications, and failed attempts to receive help from the Veterans Crisis Line.

Congratulations to Iowa’s David Young for fighting for our nations veterans and for being such a part of great changes taking place in the United States. David is the recipient of this evening’s Mischler five-star salute from all of us here at team Mischler. He is the first recipient that has nothing to do with a bond deal. It’s all about his work for our veterans.Global Market Recap

U.S. Treasuries – USTs mixed with more red and flatter. JGB’s sold off. Europe big rally.

Here’s a review of this week’s key primary market driver averages for IG Corporates only through Monday’s session followed by the averages over the prior four weeks:

KEY IG CORPORATE
NEW ISSUE DRIVERS

MON.
11/14

AVERAGES
WEEK 11/07

AVERAGES
WEEK 10/31

AVERAGES
WEEK 10/24

AVERAGES
WEEK 10/17

New Issue Concessions

2.85 bps

<3.60> bps

<0.87> bps

<0.51> bps

3.31 bps

Oversubscription Rates

2.38x

4.26x

3.32x

2.61x

3.05x

Tenors

11.05 yrs

13.31 yrs

11.33 yrs

7.77 yrs

9.16 yrs

Tranche Sizes

$991mm

$692mm

$491mm

$818mm

$1,137mm

Avg. Spd. Compression
IPTs to Launch

<14.5> bps

<22.96> bps

<17.87> yrs

<17.42> bps

New Issues Priced

Today’s recap of visitors to our IG dollar Corporate and SSA DCM:

For ratings I use the better two of Moody’s, S&P or Fitch.

IG

Issuer

Ratings

Coupon

Maturity

Size

IPTs

GUIDANCE

LAUNCH

PRICED

LEADS

21st Century Fox America

Baa1/BBB+

3.375%

11/15/2026

450

+140a

+120a (+/-3)

+117

+117

JPM-sole

21st Century Fox America

Baa1/BBB+

4.75%

11/15/2046

400

+200a

+180a (+/-3)

+177

+177

JPM-sole

Plains All American Pipeline

Baa3/BBB

4.50%

12/15/2026

750

+mid 200s/+250a

+230-235

+230

+230

BAML/BNPP/JPM/WFS

Simon Property Group LP

A2/A

2.35%

1/30/2022

550

+95-100

+80a (+/-5)

+75

+75

BAML/CITI/GS/USB

Simon Property Group LP

A2/A

3.25%

11/30/2026

750

+120-125

+110a (+/-5)

+105

+105

BAML/CITI/GS/USB

Simon Property Group LP

A2/A

4.25%

11/30/2046

550

+145-150

+135a (+/-5)

+130

+130

BAML/CITI/GS/USB

Westpac Banking Corp.

A3/A+

4.322%

11/23/2031

1,500

+237.5

+215a (+/-5)

+210

+210

BAML/CITI/JPM/MS

SSA

Issuer

Ratings

Coupon

Maturity

Size

IPTs

GUIDANCE

LAUNCH

PRICED

LEADS

EDC

Aaa/AAA

FRN

11/23/2020

500

3mL+13a

3mL+13a

3mL+13

3mL+13

BNPP/BARC/DB

Indexes and New Issue Volume

Index

Open

Current

Change

LUACOAS

1.30

1.30

0

IG27

75.503

73.988

<1.515>

HV27

166.425

161.645

<4.78>

VIX

14.48

13.37

<1.11>

S&P

2,164

2,180

16

DOW

18,868

18,923

55

USD

IG Corporates

USD

Total IG (+SSA)

DAY:

$4.95 bn

DAY:

$5.45 bn

WTD:

$15.85 bn

WTD:

$16.35 bn

MTD:

$32.311 bn

MTD:

$32.811 bn

YTD:

$1,201.092 bn

YTD:

$1,531.476 bn

Lipper Report/Fund Flows – Week ending November 9th

For the week ended November 9th, Lipper U.S. Fund Flows reported an inflow of $675.4m into Corporate Investment Grade Funds (2016 YTD net inflow of $40.967b) and a net outflow of $668.6m from High Yield Funds (2016 YTD net inflow of $6.285b).

Over the same period, Lipper reported a net outflow of $45.4m from Loan Participation Funds (2016 YTD net outflow of $1.563b).

Quigley’s Corner 09.21.16 No Prints and No Rate Increases; Corporate Debt Issuers Sit it Out

Investment Grade New Issue Re-Cap

A Big Red Zero – Land of the Rising “None” as BoJ Keeps Rates at <0.1%> & Introduces More Shifts to Policy

“Fed” Up with Rates, FOMC Holds; November Increase Has No Chance Pre- Election and Santa Claus is Coming to Town…with Coal?

All You Want and Need to Know About Today’s Fed Decision

In Janet’s Words

IG Primary & Secondary Market Talking Points

NICs, Bid-to-Covers, Tenors and Sizes

New Issues Priced

New Issue Volume

Lipper Report/Fund Flows – Week ending September 14th

Investment Grade Corporate Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

It was a no print day today as corporate debt issuers respected both the impact of the BoJ and FOMC.

Not so fast my friends…..not so fast! It’s not exactly a “Dewey Defeats Truman” moment. Still, let’s call it like it is folks – I did say “the next best thing to having tomorrow’s newspaper today is the ‘QC’”. Then on Monday, September 19th and alluding to today’s BoJ and FOMC rate decisions, I wrote, “Fed Holds; BoJ Cuts Rate and Then Some.” Well, I guess it’s not “tomorrow’s newspaper today” but I still think it’s the “next best thing to it.” The Fed Held, the BoJ introduced new fringy though convoluted easing details (“and then some”) but the BoJ kept rates unchanged. Two out of three isn’t bad, but that’s why it’s “the next best thing.” If I played baseball, I’d be in the Hall of Fame with a .666 average. Joking aside, a Fed that infers raising rates by December should have hiked rates today, but they didn’t. This is more of the same readers. Look for Fed members – both voting and non-voting – to continue giving speeches and appearing on television to opine about the rate flux that has restricted so many from doing so much. The street is the leader; the Fed is the ultimate laggard. It’s how it is. Today was more of the same. No surprise at all. The government should consider issuing a gag order on any and all Fed-speak in between meetings for all members, both voting and non-voting. They only confuse the situation and shock markets.

First up, let’s look at what the BoJ did while we were in REM sleep this morning:

A Big Red Zero – Land of the Rising “None” as BoJ Keeps Rates at <0.1%> & Introduces More Shifts to Policy

Central Banks from the FOMC to the BOE and from the ECB to the BoJ all seem to be pointing to the downside risks to continued rate cuts while at the same time highlighting that monetary policy needs to be substantially accommodative while calling on governments to share more of the economic burdens. Here’s what’s clear: growth is anemic to non-existent, inflation unchanged to nowhere, accommodative policies are manifesting themselves in new policy twists and turns and big government needs to get more involved. Hmmm…..sounds like things aren’t quite working out, eh?

o Will cap 10-year yields at 0.00% by continuing to buy 10yr JGBs implying that the BoJ must continue intervening to prevent borrowing costs from rising and to ensure that it can borrow for a decade for free.

o Changed its policy from a focus on a base money target to controlling the yield curve.

oPledged to maintain its government bond-buying in line with ¥80 trillion annually while buying fewer long-dated maturities hoping to pump up long-term interest rates thereby helping banks boost profits. There was no expansion of its current quantitative easing program.

Will this new approach be effective? Only time will tell. It certainly is a shift in monetary policy to control the yield curve. It is NOT a bazooka by any stretch and more like “fiddling around the edges.” As for the 2.00% target? Folks, we all know that’s a loooong way off. Market participants have a lot of questions with many sharing that the “BoJ should’ve just cut rates again.” Equity markets loved the news. The DOW closed up 163, the S&P was in the black 23, the VIX compressed over 2.5 and CDX27 tightened 3.2 bps.

“Fed” Up with Rates, FOMC Holds; November Increase Has No Chance Pre- Election and Santa Claus is Coming to Town…with Coal?

The Fed held rates albeit the subsequent press conference was more optimistic, if one can call it that, saying the economy appeared “slightly balanced” and “the case for an increase in the fed funds rate strengthened but decided, for the time being to wait for further evidence of continued progress toward its objectives.” You all know about the myriad global event risk factors out there. There are so many that on any given day in our inextricably global-linked world economy, should one or several of them get worse, which is entirely plausible-to-likely, the Fed can skirt around a hike by once again pointing to global events, as they have in the past, to justify standing down. In fact, in its statement Chair Yellen said, “we will closely monitor inflation and global developments.” What’s more, the next FOMC meeting will be held on November 1srt and 2nd and is not associated with a Summary of Economic Projections or a press conference by Yellen. It is highly unlikely that the Fed raises rates in November given that the meeting will take places 6 days before one our nation’s most tumultuous and raucous elections. Last year saw one rate hike to close out 2015 at its December meeting. Santa Claus will be coming to town early at the year’s last meeting of 2016 held December 13th-14th …………..but don’t be surprised to find coal in the stocking.

Folks, Q3 is about over. You hear that sound? That’s the sound of trucks? They’re backing up to print between now and Election Day – BIG TIME. 12 IG issuers are in the pipeline with a whole lot of M&A deals getting closer.

Here’s All You Want and Need to Know About Today’s Fed Decision

o The FOMC kept rates unchanged as three officials dissent for a hike.

Fixed Income Syndicate IG Corporate-only Volume Estimates for September

New Issues Priced

Lipper Report/Fund Flows

IG Corporate Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Today’s winning lotto numbers are 11-16-945 as in 11 IG Corporate issuers, priced 16 tranches totaling $9.45b. With that amount we have officially broken through this week’s syndicate midpoint average forecasts by over 7% or $39.745b vs. $36.91b. Notable today was that 4 issuers upsized their transactions from initial morning announcement sizes.

Remember what I wrote this past Monday folks (Check your “QC” dated 9/12/2016. – “Look folks, the Fed is not raising rates this year. Many sight December as the next hike but it’s not happening.” The world can barely stand on two feet let alone get economic engines back to growth mode. Today’s numbers confirm that. With that, read my lips, or read my commentary, but the take-away is the same: Fed NOT Raising Rates (at least not anytime soon, nor with any degree of significance that would upend the current global financial market environment).

Investment Grade New Issue Re-Cap – One and Done to Cap Off Record Setting Week

Global Market Recap

IG Primary & Secondary Market Talking Points

“The Best and the Brightest” – Fixed Income Syndicate Forecasts and Sound Bites for Next Week

This Week’s IG New Issues and Where They’re Trading

Lipper Report/Fund Flows – Week ending September 7th

New Issue Volume

Economic Data Releases

Rates Trading Lab- The Pain Trade(s)

IG Credit Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

Asia Development Bank printed its well telegraphed $500mm tap of its 5yr FRNs due 9/16/2021 and that was all she wrote to close a record setting number of deals in this holiday-shortened week. I’ll keep it short and sweet readers. This week hosted 40 IG Corporate issuers across 73 tranches. Including SSA issuance, the IG dollar DCM featured 46 issuers and 79 tranches. Both are records for any three consecutive sessions in history. So, you’re probably wondering what’s ahead for next week? Well, I could scribe a long ditty for you but everything is already here. Today is Friday and you know what that means – I contacted the top 23 syndicate desks to get their thoughts and numbers for next week. I happen to think we’ll print $50b but that’s just me. Scroll down and read what the “Best and the Brightest” have to say about the week ahead. It’s all here. Remember, if you fail to prepare, you’re prepared to fail. What’s more it’s free from me to you.

Before I do, however, and knowing what it’s like to sit in the syndicate pit – the nerve center of our debt capital markets – how about a resounding round of applause – no make it a standing “O” – for all the syndicate desks out there who accomplished such a tremendous feat this week. Yeah you know it, I am actually standing up on my trading floor clapping my hands for all of them. You really have no idea what busy means until you run a syndicate desk. A lot less people are working a LOT harder on syndicate desks setting new records along the way. I hope those sitting in their ivory towers remember that at the end of the year.

Global Market Recap

o U.S. Treasuries – Back-to-back terrible days for global bond markets led by the long end.

o Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the 79deals that printed, 48 tightened versus NIP for a 60.75% improvement rate while only 15 widened (19.00%) and 16 were trading flat (20.25%).

For the week ended September 7th, Lipper U.S. Fund Flows reported an inflow of $2.804b into Corporate Investment Grade Funds (2016 YTD net inflow of $32.901b) and a net inflow of $610.273m from High Yield Funds (2016 YTD net inflow of $10.160b).

BAML’s IG Master Index was unchanged at +140. +106 represents the post-Crisis low dating back to July 2007.

Standard & Poor’s Global Fixed Income Research was also unchanged at +189. The +140 reached on July 30th 2014 represents the post-Crisis low.

“The Best and the Brightest” – Syndicate Forecasts and Sound Bites for Next Week

I am happy to announce that, once again, the “QC” received unanimous responses from the 23 syndicate desks surveyed in today’s Best & Brightest poll. 21 of those participants are among 2016’s top 22 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table. In fact, all of today’s 23 participants finished in the top 25 of last year’s final IG Corporate Bloomberg league table. The 2016 League table can be found on your terminals at “LEAG” + [GO] after which you select #201 (US Investment Grade Corporates). Today’s cumulative underwriting percentage of the participating desks was 81.07% which simply means they’re the ones with visibility. But it’s not only about their volume forecasts, it’s also about their comments! This core syndicate group does it best; they know best; so they’re the ones you WANT and NEED to hear from. It’s a great look at the week ahead.

*Please note that these are Investment Grade Corporates only. They do not include SSA issuance unless otherwise noted. The question posed to the “Best and the Brightest” early this morning was premised on the following:

“We set a new all-time activity record for number of issues and tranches in three consecutive days from (Mon-Thurs.) having featured 40 IG Corporate issuers and 73 tranches between them. This week’s final all-in tally of $52.76b ranks as the 7th highest volume week in history for IG Corporate plus SSA issuance. This week also finishes as the 4th highest volume week of the year for all-in IG issuance.

Treasuries are getting slammed this morning on consensus that global Central Bank’s apprehension as to the benefits of further easing. I personally think USTs should be moving in the opposite direction. Yesterday ECB President Draghi called on EU governments to intercede to do more. Here’s what we know – while he began speaking a total of 11 issuers announced 20 tranches between them totaling $12.41b. Net, net – who cares what he thinks? The market’s response was clear -we have a lot lined up for next week and the rest of this month so, let’s get to it. This after setting an all-time issuance records for August IG Corporate-only issuance with $114.325b priced and for all-in IG Corps plus SSA issuance with $136.575b priced.

This week we priced $59.06b of all-in IG Corporate and SSA issuance. IG Corps were $52.46b. In only three active days of September we priced 45% of the syndicate midpoint average forecast for IG Corporates for the entire month or $116.02b.

For the week ended September 1st, Lipper U.S. Fund Flows reported an inflow of $2.804b into Corporate Investment Grade Funds (2016 YTD net inflow of $32.901b) and a net inflow of $610.273m from High Yield Funds (2016 YTD net inflow of $10.160b).

Week-on-week, BAML’s IG Master Index is 1 bp wider or +140 vs. last Friday’s +139 close. Spreads across the four IG asset classes since I left for block leave on August 19th tightened 3 bps to 30.25 vs. 33.25. Looking at the 19 major industry sectors, spreads tightened 4.32 bps to an average 36.63 versus 40.95 bps off their post-Crisis lows also since August 19th.

Finally, what are YOUR thoughts and number for next week’s IG new issue volume?

Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the XX deals that printed, 48 tightened versus NIP for a 60.75% improvement rate while only 15 widened (19.00%) and 16 were trading flat (20.25%).

Issues are listed from the most recent pricings at the top working back to Monday at the bottom. Thanks! –RQ

Issuer

Ratings

Coupon

Maturity

Size

IPTs

GUIDANCE

LAUNCH

PRICED

TRADING

Bemis Company Inc.

Baa2/BBB

3.10%

9/16/2026

300

+175a

+155a (+/-5)

+150

+150

145/143

BMW US Capital LLC

A2/A+

FRN

9/13/2019

250

3mL+equiv

3mL+equiv

3mL+41

3mL+41

3mL+41/40

BMW US Capital LLC

A2/A+

1.45%

9/13/2019

500

+70a

+65a (+/-5)

+60

+60

59/57

BMW US Capital LLC

A2/A+

1.85%

9/15/2021

750

+80a

+75a (+/-5)

+70

+70

70/68

BMW US Capital LLC

A2/A+

2.25%

9/15/2023

750

+95a

+90a (+/-5)

+85

+85

84/82

BOC Aviation Ltd.

BBB+/A-

2.375%

9/15/2021

500

+165a

+135-140

+135

+135

130/128

Capital One NA /
McLean, VA

Baa1/A-

FRN

9/13/2019

300

3mL+equiv

3mL+equiv

3mL+76.5

3mL+76.5

3mL+74/72

Capital One NA /
McLean, VA

Baa1/A-

1.85%

9/13/2019

1,250

+110a

+95-100

+95

+95

94/92

Capital One NA /
McLean, VA

Baa1/A-

2.25%

9/13/2021

1,000

+120-125

+110-115

+110

+110

109/107

Cox Communications Inc.

Baa2/BBB

3.35%

9/15/2026

1,000

+low 200s(212.50)

+187.5 (+/-12.5)

+175

+175

170/168

Entergy Mississippi, Inc.

A3/A

4.90%

50NC5

260

N/A

4.95%a

4.90%

$25 FMBs

$24.98/95

GATX Corporation

Baa2/BBB

3.25%

9/15/2026

350

+187.5

+175a (+/3)

+172

+172

169/166

Met Life Global Funding I

Aa3/AA-

FRN

9/14/2018

350

3mL+equiv

3mL+equiv

3mL+34

3mL+34

3mL+34/32

Met Life Global Funding I

Aa3/AA-

1.35%

9/14/2018

550

+70a

+60 the #

+60

+60

60/58

Met Life Global Funding I

Aa3/AA-

1.55%

9/13/2019

350

+75-80

+70 the #

+70

+70

70/67

Met Life Global Funding I

Aa3/AA-

1.95%

9/15/2021

750

+90a

+80 the #

+80

+80

80/77

Southern Co. Gas Corp.

Baa1/A-

2.45%

10/01/2023

350

+135a

+105a (+/-5)

+100

+100

96/94

Southern Co. Gas. Corp.

Baa1/A-

3.95%

10/01/2046

550

+185-190

+170a (+/-5)

+165

+165

160/157

Toronto Dominion Bank

A2/A-

3.625%

15NC10

1,500

REV. IPTS +225a
+237.5a

+210 (+/-5)

+205

+205

197/194

Woodside Finance Ltd.

Baa1/BBB+

3.70%

9/15/2026

800

REV IPTs: +237.5a
+237.50-250

+215a (+/-5)

+210

+210

207/203

Associated Banc-Corp.

Baa3/BB

5.375%

PerpNC5

100

N/A

5.50%a

5.375%

$25 Pfd

$25.30/.25

California Institute of Technology (px’d 9/07)

Aa2/AA-

4.283%

9/01/2116

150

+210a vs OLB

N/A

N/A

+205

+202/

Dr. Pepper Snapple Group

Baa1/BBB+

2.55%

9/15/2026

400

+125a

+110a (+/-5)

+105

+105

102/99

Mizuho Financial Group

A1/A-

FRN

9/13/2021

1,250

3mL+equiv

3mL+equiv

3mL+114

3mL+114

3mL+113/111

Mizuho Financial Group

A1/A-

2.273%

9/13/2021

1,000

+135a

+120a (+/-5)

+115

+115

118/116

Mizuho Financial Group

A1/A-

2.839%

9/13/2026

1,000

+150a

+135a (+/-5)

+130

+130

127/125

Nationwide Bldg. Society

Baa1/A-

4.00%

9/14/2026

1,250

+275a

+255a (+/-5)

+250

+250

240/235

New York Life Glbl. Fdg.

Aaa/AA+

1.25%

9/14/2021

750

+ low 70s+72.5

+65a (+/-3)

+62

+62

62/60

Nissan Motor Acceptance

A3/A-

FRN

9/13/2019

500

3mL+equiv

3mL +equiv

3mL+52

3mL+52

3mL+53/51

Nissan Motor Acceptance

A3/A-

1.55%

9/13/2019

500

+95-100

+73a (+/-3)

+70

+70

71/68

Nissan Motor Acceptance

A3/A-

1.90%

9/14/2021

500

+105-110

+85a (+/-3)

+82

+82

82/80

Nonghyup Bank

A1/A+

1.875%

9/12/2021

500

+100a

N/A

N/A

+85

83/82

Protective Life Glbl. Fdg.

A2/AA-

1.555%

9/13/2019

350

+85a

+72a (+/-2)

+70

+70

70/68

Protective Life Glbl. Fdg.

A2/AA-

1.999%

9/14/2021

300

+high 90s+97.5

+90a (+/-2)

+88

+88

88/86

PSE&G Co.

Aa3/A

2.25%

9/15/2026

425

+ low 90s+92.5

+75-80

+75

+75

72/70

Royal Bank of Scotland Group plc

BBB-/BBB+

3.875%

9/12/2023

2,650

+275a

+255a (+/-5)

+250

+250

247/246

Shell International Finance

Aa2/A

FRN

9/12/2019

500

3mL+equiv

3mL+equiv

3mL+35

3mL+35

3mL+34/31

Shell International Finance

Aa2/A

1.375%

9/12/2019

1,000

+70a

+55a (+/-2)

+53

+53

55/53

Shell International Finance

Aa2/A

1.80%

9/12/2021

1,000

+85a

+75a (+/-5)

+70

+70

70/68

Shell International Finance

Aa2/A

2.50%

9/12/2026

1,000

+125a

+110a (+/-2)

+108

+108

106/104

Shell International Finance

Aa2/A

3.75%

9/12/2046

1,250

+175a

+160a (+/-5)

+155

+155

154/151

TJX Companies Inc.

A2/A+

2.25%

9/15/2026

1,000

+87.5

+80a (+/-2)

+80

+80

78/76

Valero Energy Corp.

Baa2/BBB

3.40%

9/15/2026

1,250

+200a

+190 the #

+190

+190

189/186

W.P. Carey Inc.

Baa2/BBB

4.25%

10/01/2026

350

+300a

+280a (+/-5)

+275

+275

260/255

Dexia Credit Local

Aa3/AA

1.875%

9/15/2021

1,250

MS +79a

MS +80a

MS +79

+80.45

77/75

Export Dev. Bank of Canada

Aaa/AAA

1.00%

9/13/2019

1,000

MS +3a

RG: MS +2a
MS +3a

MS +1

+19.35

18/16.5

IADB

Aaa/AAA

1.25%

9/14/2021

2,100

MS +23a

MS +23a

MS +22

+23.1

21.5/19.5

Instituto de Credito Oficial

Baa2/BBB+

1.625%

9/14/2018

500

MS +70a

MS +65-70

MS +65

+90.1

83/80

Kommuninvest

Aaa/AAA

1.125%

9/17/2019

1,250

MS +15a

MS +14a

MS +14

+32.05

31/29

Asian Development Bank(tap) New total: $1,000mm

Aaa/AAA

FRN

6/16/2021

3mL+19a

3mL+19a

N/A

3mL+19

3mL+19

3mL+19/17

American Honda Finance

A1/A+

FRN

9/09/2021

250

3mL+equiv

3mL+equiv

3mL+61

3mL+61

3mL+59/57

American Honda Finance

A1/A+

1.70%

9/09/2021

1,000

+75-80

+65a (+/-2)

+63

+63

63/61

American Honda Finance

A1/A+

2.30%

9/09/2026

500

+100a

+80 the #

+80

+80

76/74

BNZ International Fdg. Ltd.

Aa3/AA-

FRN

9/14/2021

250

3mL+equiv

3mL+equiv

3mL+98

3mL+98

3mL+94/93

BNZ International Fdg. Ltd.

Aa3/AA-

2.10%

9/14/2021

600

+120a

+105a (+/-5)

+100

+100

100/98

Cabot Corp.

Baa2/BBB

3.40%

9/15/2026

250

+low 200s+212.5

+190a (+/-2.5)

+187.5

+187.5

174/172

Duke Energy Florida

A1/A

3.40%

10/01/2046

600

+130a

+120 the #

+120

+120

119/117

Home Depot

A2/A

2.125%

9/15/2026

1,000

+90a

+75a (+/-5)

+70

+70

71/69

Home Depot

A2/A

3.50%

9/15/2056

1,000

+160-165

+140a (+/-5)

+135

+135

132/129

John Deere Capital Corp.

A2/A

FRN

10/09/2019

250

3mL+equiv

3mL+equiv

3mL+28.5

3mL+28.5

3mL+28/27

John Deere Capital Corp.

A2/A

1.25%

10/09/2019

500

+60a

+50a (+/-3)

+47

+47

49/47

KeyCorp

Baa3/BB+

5.00%

PerpNC10

525

5.125%a

5.00%a (+/-10)

5.00%

3mL+360.6

3mL+342/337

Korea Development Bank

Aa2/AA

1.375%

9/12/2019

500

+low 70s+72.5

+60a (+/-2.5)

+57.5

+57.5

54/52

Korea Development Bank

Aa2/AA

2.00%

9/12/2026

500

+low 70s+72.5

+55-60

+55

+55

56/54

Magellan Midstream Part.

Baa1/BBB+

4.25%

9/15/2046

500

+235-240

+215a (+/-5)

+210

+210

200/197

Mitsubishi UFJ Finc’l. Grp.

A1/A

FRN

9/13/2021

1,000

3mL+equiv

3mL+equiv

3mL+106

3mL+106

3mL+104/

Mitsubishi UFJ Finc’l. Grp.

A1/A

2.19%

9/13/2021

1,500

+120-125

+110a (+/-2)

+108

+108

111/108

Mitsubishi UFJ Finc’l. Grp.
(Green Bond)

A1/A

2.527%

9/13/2023

500

+130a

+115-120

+115

+115

110/108

Mitsubishi UFJ Finc’l. Grp.

A1/A

2.757%

9/13/2026

1,000

+135a

+125a (+/-2)

+123

+123

124/122

Pricoa Global Funding I

AA-/A+

1.45%

9/13/2019

350

+75-80

+60-63

+60

+60

59/58

SEB

Aa3/AA-

FRN

9/13/2019

500

3mL+equiv

3mL+equiv

3mL+57

3mL+57

3mL+57/55

SEB

Aa3/AA-

1.50%

9/13/2019

1,000

+low 80s+82.5

+75 the #

+75

+75

74/72

SEB

Aa3/AA-

1.875%

9/13/2021

1,000

+low 90s+92.5

+85 the #

+85

+85

84/82

Siemens AG

A1/A+

FRN

9/13/2019

350

3mL+equiv

3mL+equiv

3mL+32

3mL+32

3mL+32/30

Siemens AG

A1/A+

1.30%

9/13/2019

1,100

+60a

+50a (+/-5)

+50

+50

52/50

Siemens AG

A1/A+

1.70%

9/15/2021

1,100

+70-75

+60a (+/-5)

+60

+60

61/59

Siemens AG

A1/A+

2.00%

9/15/2023

750

+80a

+70a (+/-5)

+70

+70

71/69

Siemens AG

A1/A+

2.35%

10/15/2026

1,700

+90-95

+85a (+/-5)

+85

+85

87/85

Siemens AG

A1/A+

3.30%

9/15/2046

1,000

+120a

+110a (+/-5)

+110

+110

112/110

Below please find my synopsis of everything Syndicate and Secondary from today’s debt capital markets, including the investment grade corporate bond data drill down as seen from my seat here in Syndicate, Sales and DCM.

Ron Quigley, Managing Director

NICs, Bid-to-Covers, Tenors and Sizes

Here’s this week’s day-by-day re-cap of key primary market driver averages for IG Corporates followed by this week’s and the prior three week’s averages:

KEY IG CORPORATE
NEW ISSUE DRIVERS

MON.
9/05

TUES.
9/06

WED.
9/07

TH.
9/08

FRI.
9/09

THIS WEEK’S
AVERAGES

AVERAGES
WEEK 8/29

AVERAGES
WEEK 8/22

AVERAGES
WEEK 8/15

New Issue Concessions

Labor Day

2.00 bps

0.55 bps

1.06 bps

N/A

1.30 bps

5.47 bps

1.86 bps

<4.18> bps

Oversubscription Rates

Labor Day

3.20x

2.99x

3.53x

N/A

3.23x

2.18x

3.73x

4.40x

Tenors

Labor Day

9.59 yrs

11.33 yrs

6.90 yrs

N/A

9.42 yrs

4.47 yrs

8.94 yrs

11.43 yrs

Tranche Sizes

Labor Day

$727mm

$791mm

$621mm

N/A

$719mm

$820mm

$661mm

$697mm

Lipper Report/Fund Flows – Week ending September 7th

For the week ended September 1st, Lipper U.S. Fund Flows reported an inflow of $2.804b into Corporate Investment Grade Funds (2016 YTD net inflow of $32.901b) and a net inflow of $610.273m from High Yield Funds (2016 YTD net inflow of $10.160b).

Over the same period, Lipper reported a net inflow of $318.421m from Loan Participation Funds (2016 YTD net outflow of $4.426b).

There is a lot of pain out there. Why, you may ask, do we have a steepening curve in the face of hawkish Fed-speak? I say it is partly because the shedding of duration trumps anything that may happen on the curve. As I have said time and again, any change in either the nature or pace of monetary stimulus will first lead to a shedding of duration. After all, it would be difficult to justify adding duration in the face of either a tighter Fed or a less dovish ECB or BOJ. I’m not saying that more restrictive monetary policy will not flatten the curve. Brainard’s speech looms as a potential harbinger of a move sooner rather than later given her traditionally dovish stance. But I do know we have a lot of supply and at least some central bank rhetoric coupled with market concerns over the efficacy of continuing current monetary policy dogma. Add unwinds of risk parity trades in a very illiquid market and you have a lot of longs all heading for the exits at the same time. I will be out of the office until next Friday attending a conference. Have a nice weekend. -Jim Levenson

After the IG dollar DCM posted the busiest day of the year yesterday with 14 issuers pricing 29 tranches for $21.075b, today could only pale in comparison, right? WRONG! Investment Grade Corporate Debt Issuance truly is the only game in town in what is a perfect storm for issuers to secure low funding as investors clamor in their search for yield in better rated Corporate debt. Today’s tally – 15 IG Corporate issuers priced 24 tranches totaling $18.975bn while the SSA space featured 5 issuers, 5 tranches and $6.1b bringing the all-in IG day total to 20 issuers, 29 tranches and $25.075b.

The WTD IG Corporate only volume total now stands at $40.05b or 34.5% of the syndicate midpoint average estimate for all of September! After only two active print days thus far this month, all-in (IG Corporate plus SSA) September volume is $46.15b.

Of course it’s not just about investors seeking yield and companies issuing cost efficient debt, it’s also about the state of our inextricably global-linked world economy. Tomorrow all eyes and ears will once again be on and tuned into what ECB President Mario Draghi says and how he says it. Although the June BREXIT impact on the EU will need more time to influence now start showing up in the EU’s numbers as everything in their economic toolbox to raise inflation has faltered.

How much can issue in September? Well, we each have our own opinion, but we also have our respective corrals of long-time, trusted “go to” market participants, sources and cognoscente, whose opinions we value and who provide great sounding boards, queries and insights along with quality daily humor, etc. Included in my stable is Bloomberg’s formidable old school tag team of Ed Baldinger and Bob Elson. (Pssst! Don’t be fooled though…….we all know Lisa Loray is the girl behind the curtain when it comes to the dynamic duo!) Anyway, Bob reached out today asking me, “I’m just curious but has anybody come back and changed their $125b estimate for September to something higher? Like 180b?…….Do I hear $200b?” That’s what’s going on folks. Here’s my response, “Yeah exactly. No one did. But my “Best & Brightest” survey is for IG Corporates only. Across the last 3 years, September SSA issuance has averaged $29.71b so add that to the IG Corporate midpoint average forecast of $116.59b and we get $145.73b. But I get your point. Tomorrow I am not so sure this machine churns out product at the current two-day pace as there is an important ECB meeting. However, “if” corporations issue ahead of what can only be further negative EU economic news then I think $180b “all-in” (IG Corps plus SSA) is not out of the question!”

I then consulted with another long-time seer, sage, savant and friend, Ken Jaques of Informa Globalmarkets and asked him what he thought.. His quick reply – “I think we’ll see $165b – $170b!” I’m just saying folks. Bankers bank. I get the bulge bracket syndicate desks have visibility argument but here we have – LISTEN UP – a cumulative total of 161 years of experience between Ed, Bob, Ken and I. Hey, it’s gotta count for something right?

Additionally, scroll down and take a look at the “New Issue Pipeline.” There are 12imminent deals waiting in the queue not to mention M&A related financings that have to get done.

Have a great evening!
Ron Quigley, Managing Director, Head of Fixed Income Syndicate

Below please find my synopsis of everything Syndicate and Secondary from today’s debt capital markets, including the investment grade corporate bond data drill down as seen from my seat here in Syndicate, Sales and DCM.

NICs, Bid-to-Covers, Tenors and Sizes

Here’s a review of this week’s key primary market driver averages for IG Corporates only through Tuesday’s session followed by the averages over the prior four weeks:

KEY IG CORPORATE
NEW ISSUE DRIVERS

MON.
9/05

TUES.
9/06

AVERAGES
WEEK 8/29

AVERAGES
WEEK 8/22

AVERAGES
WEEK 8/15

AVERAGES
WEEK 8/08

New Issue Concessions

Labor Day

2.00 bps

5.47 bps

1.86 bps

<4.18> bps

1.83 bps

Oversubscription Rates

Labor Day

3.20x

2.18x

3.73x

4.40x

3.56x

Tenors

Labor Day

9.59 yrs

4.47 yrs

8.94 yrs

11.43 yrs

9.05 yrs

Tranche Sizes

Labor Day

$727mm

$820mm

$661mm

$697mm

$732mm

New Issues Priced

Today’s recap of visitors to our IG dollar Corporate and SSA DCM:

For ratings I use the better two of Moody’s, S&P or Fitch.

IG

Issuer

Ratings

Coupon

Maturity

Size

IPTs

GUIDANCE

LAUNCH

PRICED

LEADS

Associated Banc-Corp.

Baa3/BB

5.375%

PerpNC5

100

N/A

5.50%a

5.375%

$25 Pfd

BAML/UBS

Dr. Pepper Snapple Group

Baa1/BBB+

2.55%

9/15/2026

400

+125a

+110a (+/-5)

+105

+105

CS/JPM/MS

Mizuho Financial Group

A1/A-

FRN

9/13/2021

1,250

3mL+equiv

3mL+equiv

3mL+114

3mL+114

GS/JPM/MIZ

Mizuho Financial Group

A1/A-

2.273%

9/13/2021

1,000

+135a

+120a (+/-5)

+115

+115

GS/JPM/MIZ

Mizuho Financial Group

A1/A-

2.839%

9/13/2026

1,000

+150a

+135a (+/-5)

+130

+130

GS/JPM/MIZ

Nationwide Bldg. Society

Baa1/A-

4.00%

9/14/2026

1,250

+275a

+255a (+/-5)

+250

+250

BAML/BARC/CITI/JPM/UBS

New York Life Glcl. Fdg.

Aaa/AA+

1.25%

9/14/2021

750

+ low 70s+72.5

+65a (+/-3)

+62

+62

BARC/GS/JPM

Nissan Motor Acceptance

A3/A-

FRN

9/13/2019

500

3mL+equiv

3mL +equiv

3mL+52

3mL+52

CITI/HSBC/MIZ/MUFG

Nissan Motor Acceptance

A3/A-

1.55%

9/13/2019

500

+95-100

+73a (+/-3)

+70

+70

CITI/HSBC/MIZ/MUFG

Nissan Motor Acceptance

A3/A-

1.90%

9/14/2021

500

+105-110

+85a (+/-3)

+82

+82

CITI/HSBC/MIZ/MUFG

Nonghyup Bank

A1/A+

1.875%

9/12/2021

500

+100a

N/A

N/A

+85

CITI/CA/HSBC/JPM

Protective Life Glbl. Fdg.

A2/AA-

1.555%

9/13/2019

350

+85a

+72a (+/-2)

+70

+70

BARC/MS/USB

Protective Life Glbl. Fdg.

A2/AA-

1.999%

9/14/2021

300

+high 90s+97.5

+90a (+/-2)

+88

+88

BARC/MS/USB

PSE&G Co.

Aa3/A

2.25%

9/15/2026

425

+ low 90s+92.5

+75-80

+75

+75

CS/MUFG/WFS

Royal Bank of Scotland Group plc

BBB-/BBB+

3.875%

9/12/2023

2,650

+275a

+255a (+/-5)

+250

+250

BAML/BNPP/MS/RBS

Shell International Finance

Aa2/A

FRN

9/12/2019

500

3mL+equiv

3mL+equiv

3mL+35

3mL+35

CITI/GS/JPM

Shell International Finance

Aa2/A

1.375%

9/12/2019

1,000

+70a

+55a (+/-2)

+53

+53

CITI/GS/JPM

Shell International Finance

Aa2/A

1.80%

9/12/2021

1,000

+85a

+75a (+/-5)

+70

+70

CITI/GS/JPM

Shell International Finance

Aa2/A

2.50%

9/12/2026

1,000

+125a

+110a (+/-2)

+108

+108

CITI/GS/JPM

Shell International Finance

Aa2/A

3.75%

9/12/2046

1,250

+175a

+160a (+/-5)

+155

+155

CITI/GS/JPM

TJX Companies Inc.

A2/A+

2.25%

9/15/2026

1,000

+87.5

+80a (+/-2)

+80

+80

BAML/DB/JPM/WFS

Valero Energy Corp.

Baa2/BBB

3.40%

9/15/2026

1,250

+200a

+190 the #

+190

+190

BARC/BARC/JPM/MS
MIZ/MUFG/RBC/WFS

W.P. Carey Inc.

Baa2/BBB

4.25%

10/01/2026

350

+300a

+280a (+/-5)

+275

+275

BARC/CITI/JPM

SSA

Issuer

Ratings

Coupon

Maturity

Size

IPTs

GUIDANCE

LAUNCH

PRICED

LEADS

Dexia Credit Local

Aa3/AA

1.875%

9/15/2021

1,250

MS +79a

MS +80a

MS +79

+80.45

DB/GS/HSBC/JPM

Export Dev. Bank of Canada

Aaa/AAA

1.00%

9/13/2019

1,000

MS +3a

RG: MS +2a
MS +3a

MS +1

+19.35

BMO/CITI/JPM/RBC

IADB

Aaa/AAA

1.25%

9/14/2021

2,100

MS +23a

MS +23a

MS +22

+23.1

BAML/JPM/NOM/RBC

Instituto de Credito Oficial

Baa2/BBB+

1.625%

9/14/2018

500

MS +70a

MS +65-70

MS +65

+90.1

GS/JPM/SG

Kommuninvest

Aaa/AAA

1.125%

9/17/2019

1,250

MS +15a

MS +14a

MS +14

+32.05

CITI/DAIW/HSBC/NORD

Lipper Report/Fund Flows – Week ending September 1st

For the week ended September 1st, Lipper U.S. Fund Flows reported an inflow of $224.536m into Corporate Investment Grade Funds (2016 YTD net inflow of $30.097b) and a net outflow of $386.754m from High Yield Funds (2016 YTD net inflow of $9.55b).

Over the same period, Lipper reported a net inflow of $61.364m from Loan Participation Funds (2016 YTD net outflow of $4.745b).

The 10-day IG spread performance vs. the T10 across the ratings spectrum and how IG compared versus high yield:

Spreads across the four IG asset classes are an average 30.0 bps wider versus their post-Crisis lows!

ASSET CLASS

9/06

9/05

9/02

9/01

8/31

8/30

8/29

8/26

8/25

8/24

1-Day Change

10-Day Trend

PC
low

IG Avg.

140

139

139

139

139

138

138

138

139

140

+1

0

106

“AAA”

81

80

80

80

80

76

76

77

77

77

+1

+4

50

“AA”

82

82

82

82

82

81

81

81

82

81

0

+1

63

“A”

110

109

109

109

109

108

108

108

109

109

+1

+1

81

“BBB”

183

183

183

183

183

181

182

182

183

183

0

0

142

IG vs. HY

369

370

370

373

371

369

372

366

375

373

<1>

<4>

228

IG Credit Spreads by Industry

…….and a snapshot of the major investment grade sector credit spreads for the past ten sessions:

Spreads across the major industry sectors are an average 36.58 bps wider versus their post-Crisis lows!

INDUSTRY

9/06

9/05

9/02

9/01

8/31

8/30

8/29

8/26

8/25

8/24

1-Day Change

10-Day Trend

PC
low

Automotive

115

115

115

115

114

113

113

113

114

114

0

+1

67

Banking

128

128

128

128

128

126

126

126

127

128

0

0

98

Basic Industry

187

187

187

187

187

184

185

184

186

187

0

0

143

Cap Goods

102

101

101

102

101

100

101

101

102

102

+1

0

84

Cons. Prod.

109

109

109

109

109

107

107

107

108

108

0

+1

85

Energy

189

189

189

190

189

187

188

187

189

189

0

0

133

Financials

165

164

164

164

164

163

165

163

166

167

+1

<2>

97

Healthcare

116

115

115

115

115

114

114

114

115

114

+1

+2

83

Industrials

141

141

141

141

141

140

140

140

141

141

0

0

109

Insurance

163

162

162

162

162

162

162

161

163

164

+1

<1>

120

Leisure

140

141

141

140

141

140

141

142

143

143

<1>

<3>

115

Media

163

163

163

163

163

162

162

163

164

163

0

0

113

Real Estate

147

148

148

149

149

148

148

149

150

150

<1>

<3>

112

Retail

117

116

117

116

116

115

115

116

116

116

+1

+1

92

Services

135

134

135

135

135

133

133

134

136

135

+1

0

120

Technology

120

120

120

120

120

121

122

123

124

124

0

<4>

76

Telecom

161

160

161

160

161

160

160

160

161

161

+1

0

122

Transportation

139

138

138

139

139

138

138

138

139

140

+1

<1>

109

Utility

140

139

139

139

139

140

140

140

142

142

+1

<2>

104

New Issue Volume

Index

Open

Current

Change

IG26

71.162

71.635

0.473

HV26

166.84

165.17

<1.67>

VIX

12.02

11.94

<0.08>

S&P

2,186

2,186

0

DOW

18,538

18,526

<12>

USD

IG Corporates

USD

Total IG (+ SSA)

DAY:

$18.975 bn

DAY:

$25.075 bn

WTD:

$40.05 bn

WTD:

$46.15 bn

MTD:

$40.05 bn

MTD:

$46.15 bn

YTD:

$965.568 bn

YTD:

$1,227.455 bn

Economic Data Releases

TODAY’S ECONOMIC DATA

PERIOD

SURVEYED ESTIMATES

ACTUAL NUMBER

PRIOR NUMBER

PRIOR REVISED

MBA Mortgage Applications

Sept. 2

—-

0.9%

2.8%

—-

JOLTS Job Openings

July

5630

5871

5624

5643

Rates Trading Lab

Market held support today and we pretty much traded in tandem with Europe. Curve is showing its seasonal bias to steepen evince itself as the long end seemed to be for sale at every pop.

ECB takes center stage tomorrow at 7:45AM EDT. It won’t be easy for them, as they have to balance mixed confidence indicators since the Brexit referendum, ongoing uncertainty about the future relationship between the U.K. and the EU, as well as the outlook for the U.S. and the Fed rate glide-path. This week’s disappointing German data comes too late for the updated set of staff projections, but will support the doves. However, the ECB doesn’t have many QE options left lest it risks more market dislocation. We’ll probably get dovish talk from Draghi and perhaps extension of the time frame for QE coupled with some tweaks, like a possible removal of the deposit rate as the lower limit for purchases to alleviate the increasing shortage of bonds but also push short term rates even lower. It does seem certain that the ECB will highlight the need for structural reforms to boost Eurozone growth. European yields have fallen and equities have moved higher in anticipation of more accommodation despite officials trying to limit expectations, so risk is at least an initial correction in both bond and stock markets, though effects here would be muted to an extent given the outperformance of Europe.